When H.R. 3765, the Temporary Payroll Tax Cut Continuation Act of 2011 was signed by President Obama on December 23^rd, 100 percent bonus depreciation or the ability to quickly write off equipment purchases ended. Congress was not able to offset the expense with equivalent revenue generators.

A review of 1031 exchange activity reflects $73.6 billion dollars deferred in 2005 decreasing to $2.5 billion estimated by the Joint Committee on Taxation in 2011.

A Subway franchisee selling his location recently asked me if a 1031 exchange allowing the owner to defer the capital gain and recaptured depreciation tax could apply to his sale.

1031 tax deferred exchanges and franchises have more in common than may you think. Generating cash flow is king while saving tax dollars is a close second. Over the past couple of years, I have accommodated exchanges for owners of franchises.